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Category: Money

Tax Deal Alleviates Senate’s Hurdle

Written on December 14, 2010 by Japhet Writ

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The final Senate approval for Bush Tax Cuts extension, as well as unemployment benefits and the payroll tax cut could come as early as today. Will these new packages help the US economy?

Last Monday, the hotly debated tax deal negotiated by President Barack Obama and the Republican leaders cleared a key Senate procedural hurdle. It can be expected that the final Senate approval will come as early as today. The package to extend the for two more years, as well as the unemployment benefits for additional 13 months, and cutting the payroll tax by two percent for a year already received a nod from the Senate. That being said, Obama is urging the House to pass it quickly despite the fact that both sides of the political spectrum are unhappy.

However, the have warned that they might try to change the deal. The estate tax that is set to return next year with a top rate of 55% together with a $1 million exemption, would instead come back with a 35% rate along with $5 million absolution. But the pointed out that a full return of estate tax would make it close to impossible for many businesses to transfer from one generation to the next. Overall, the tax and benefits package is anticipated to add $893 billion to the federal debt for the next five years.

The Bush Tax Cuts are set to expire by the end of the year, hence Obama and his top aides argues that a deal must be cut and delivered now. With the new deal already approved, the Democrats are opposing the package that includes a two-year extension of Bush Tax Cuts for everyone — including millionaires. On the other hand, Senate Republicans refused any proposal that allows tax cuts for the wealthy to expire. They demand that all current rates must be extended. Still, Obama points out that the new measure will help boost the country’s recovery from recession and provide taxpayers with certainty of what they will owe in 2011.

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